SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
(Mark One)
X ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE
ACT OF 1934 [FEE REQUIRED] For the Fiscal Year Ended December 31,
1995
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
Commission File Number: 33-13058-C
SURGIDYNE, INC.
(Name of small business issuer in its charter)
Minnesota
58-1486040
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer
Identification Number)
9909 South Shore Drive
Minneapolis, MN 55441
(Address of principal executive offices) (Zip Code)
Issuer's telephone number (612) 595-0665
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act: Common
Stock, no par
value
(Title of class)
Check whether the issuer (1) filed all reports required to be filed
by Section 13 or
15(d) of the Exchange Act during the past 12 months (or for such
shorter period
that the registrant was required to file such reports), and (2) has
been subject to
such filing requirements for the past 90 days. X YES NO
Check if there is no disclosure of delinquent filers in response to
Item 405 of
Regulation S-B is not contained in this form, and no disclosure
will be contained, to
the best of registrant's knowledge. In definitive proxy or
information statements
incorporated by reference in Part III of the Form 10-KSB or any
amendment to this
Form 10-KSB. X
Issuer's revenues for the year ended December 31, 1995 were
$691,471.
The aggregate market value of the voting stock held by
non-affiliates of the
Registrant as of February 23, 1996 was approximately $234,704
(based on a price of
$.06, the bid price of the local over-the-counter market.) For
purposes of this
calculation, all Directors and Executive Officers of the Registrant
have been deemed
affiliates.
4,537,913 shares of Common Stock, no par value, were outstanding at
February 23,
1996
DOCUMENTS INCORPORATED BY REFERENCE NONE
This Form 10-KSB consists of 26 pages (including exhibits). The
index to exhibits
is set forth on page 23.
<PAGE>
PART 1
ITEM 1. DESCRIPTION OF BUSINESS
General
Surgidyne, Inc. (the "Company"), a Minnesota corporation, designs,
develops,
manufactures and markets specialty medical and surgical wound
drainage products.
The Company was incorporated in Minnesota in March, 1984, and is
successor by
merger to a corporation of the same name which was incorporated in
Georgia in
September, 1982. The Company's executive offices are located at
9909 South
Shore Drive, Minneapolis, Minnesota 55441 (612-595-0665).
Products
The Company's current product lines are comprised of VariDyne
microelectronic
battery powered suction systems for postoperative wound drainage,
including
orthopedic wound drainage and autotransfusion, disposable SABER and
SCEPTRE
bulb evacuators for closed wound suction, and disposable products
for use with the
above systems. In 1990, the Company entered into agreements with
Baxter
Healthcare Corporation (Baxter) for the development, license,
manufacture and sale
of an autotransfusion system under their Jackson-Pratt (J-P)
trademark. The
manufacturing agreement provides for Baxter to pay an agreed upon
price for the
product. This agreement expired December 31, 1993 and the Company
is currently
manufacturing under a order/bid basis. The development and license
agreement
calls for a 20% royalty on the net sales by Baxter to their
customers of
autotransfusion system products until total royalties paid equal
$2,000,000. The
Company began providing contract manufacturing, packaging services
and limited
component sales for original equipment manufacturers in 1994 and
has expanded this
area of production. In 1995, the Company began development of new
medical related
products to broaden it's current product line. In 1996, the
Company plans to begin
further development on additional lines in the medical related
products area.
Marketing and Distribution
The Company's basic products are sold through a network of
independent dealers,
with thirteen domestic dealers and five international dealers. The
Company sells
directly to hospital accounts in the United States in areas without
dealer
representation. The Company does not employ an outside sales force
and is largely
dependent upon its dealers for sales and service to hospital
accounts. The Company
has contracts with Baxter providing Baxter with exclusive worldwide
rights to
marketing of the J-P Autotransfusion products, and nonexclusive
rights to
worldwide marketing, with the exception of Italy, of the wound
drainage products.
Restructuring within Baxter has resulted in a loss of momentum in
the national
marketing of the Company's products and the Company has no
immediate expectations
<PAGE>
that Baxter marketing efforts will result in increased sales.
Internationally, the
Company's products are sold through five dealers located in Canada,
Puerto Rico,
the United Kingdom, France and Italy.
The Company's business is not seasonal in nature. The Company
typically does not
provide extended payment terms to customers and, has had
satisfactory collections
of accounts receivable. Sales are usually made on a net 30 day
basis. Sales orders
from the exclusive dealer in Italy are done by irrevocable letter
of credit in U.S.
dollars for all orders totalling $5,000 or more.
Suppliers
The Company purchases all components for its products from outside
suppliers and
has some components manufactured to its specification. The Company
is dependent
upon such suppliers for a readily available supply of necessary
components. The
Company has single sources of supply for some of its critical
components.
Management has determined that developing and maintaining
additional sources for
all critical components is not cost effective. The Company is
unaware of any
difficulty experienced by its suppliers in obtaining raw materials
for component
manufacture. The Company has no written agreements with its
suppliers, other
than purchase orders. Most suppliers sell to the Company on
standard credit terms,
while some sell on a collect-on-delivery basis.
Patents and Trademarks
The Company has patents covering its SABER Bulb Evacuator and on
its 3C System.
There can be no assurance that these patents will be of material
benefit to the
Company.
Major Customers
Net sales to international customers for the years ended December
31, 1995 and 1994
totalled $175,612 and $224,488 respectively, representing
approximately 25% and 33%
of the Company's sales. Chirmed, S.R.L., located in Sassari, Italy,
accounted for
18% and 25% of total net sales for the 1995 and 1994, respectively.
Baxter accounted
for 15% and 8% of total net sales in 1995 and 1994, respectively.
The loss or material
reduction of business from these customers could adversely affect
future net sales
levels.
Competition
The hospital market for disposable suction drainage products is
highly price
competitive. The only direct competition known to the Company in
the market for
battery-powered, variable closed wound suction drainage systems is
Stryker
Corporation. Its Constavac unit was introduced in 1985 and is
primarily used as a
<PAGE>
replacement for manual closed wound suction drainage systems.
Competitors in
post-operative orthopedic autotransfusion with direct reinfusion
products include
Stryker Corporation; Davol, a subsidiary of C.R. Bard; Boehringer
Laboratories;
Zimmer, Inc., a subsidiary of Bristol-Myers Squibb Company and Gish
Biomedical,
Inc. The Company's products are designed to provide significant
enhancements to
existing products in its specific market niche.
Research and Development
For the fiscal years ended December 31, 1995 and 1994 the Company
incurred
research and development expenditures of $11,070 and $29,736,
respectively. The
low level of research and development expenditures are attributable
to the maturing
of marketed products and cash flow constraints. The Company is
expected to
increase research and development expenditures as funds become
available.
Government Regulation
The Company's products are classified as Class I and II medical
devices under the
Medical Device Amendment to the Federal Food, Drug and Cosmetic Act
(the "Act").
As such, they are subject to regulation by the United States Food
and Drug
Administration (FDA), which has the power to approve medical
devices before sale,
remove medical devices from the marketplace if found to be unsafe
or ineffective, and
control plant conditions to assure product quality. No government
approval, other
than FDA premarket approval, is required for sale and use of the
Company's
products in the United States, Puerto Rico and the United Kingdom.
The Company
has FDA 510(k) exemption for all marketed products, including
VariDyne Vacuum
Controllers and collection systems, SABER and SCEPTRE Bulb
Evacuators, and J-P
autotransfusion products. The VariDyne Vacuum Controller Models
140 and 350 have
been approved by the Canadian Standards Association.
Employees
At December 31, 1995, 7 full-time persons were employed by the
Company. None of
the Company's employees are represented by a labor union. The
Company has
experienced no work stoppages and believes that its employee
relations are good.
ITEM 2. DESCRIPTION OF PROPERTY
The Company's administrative headquarters, research and
development, production
and warehousing operations are located in a single building in
Minneapolis,
Minnesota. This facility comprises approximately 7,000 square
feet, which the
Company leases for approximately $3,000 per month through November,
1998.
Management considers that this property is sufficient for its
present operations.
<PAGE>
ITEM 3. LEGAL PROCEEDINGS
The Company is not a party to, nor is any of its property subject
to, any material
pending legal proceedings, nor any material legal proceedings known
to be
contemplated by governmental authorities or others.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS
No matters were submitted to a vote of shareholders during the
fourth quarter ended
December 31, 1995.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The following table sets forth for the fiscal period indicated, the
high and low bid
prices as reported in the local over-the-counter market in
Minneapolis, Minnesota,
by Summit Investments Corporation. These quotations reflect
inter-dealer prices,
without retail mark-up, mark-down or commission and may not
represent actual
transactions.
Bid Price Range
1995 1994
Fiscal Period
High Low High Low
First quarter $
.25 $ .05 $ .50 $ .19
Second quarter
.15 .05 .44 .25
Third quarter
.15 .05 .38 .13
Fourth quarter
.16 .06 .25 .06
On February 23, 1996, the bid price for the common shares as
reported in the local
over-the-counter market was $.06 and the Company had 424 holders of
record of its
common shares. Although the shares are reported in the local
over-the-counter
market, there was limited sales activity.
The Company has not paid cash dividends on its common shares and
does not plan
to pay cash dividends to its shareholders in the immediate future.
On December 1,
1993, the Company's debenture holders elected to convert the face
value of the
debentures into 1,600,000 shares of unregistered Series A preferred
stock at $.25
per share. Commencing January 1, 1994, the preferred shareholders
are entitled
to a dividend equal to 3% of net sales. The dividend in a given
year is limited to 50%
of the Company's net income. Cumulative dividends cannot exceed
$210,000. In
1995, the Company accrued dividends to preferred shareholders of
$437.
<PAGE>
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations - 1995 compared to 1994
Net Sales. Net sales for the year ended December 31, 1995
increased by $17,809 as
compared to the same period in 1994 primarily as a result of
increased sales to
Baxter. Baxter sales increased from $53,893 in 1994 to $105,161 in
1995. Sales to
Baxter are expected to continue to increase in 1996 as Baxter
begins to replenish
their inventory levels of the Company's products.
Gross Profit. Gross profit, expressed as a percentage of sales,
increased from 24%
in 1994 to 34% in 1995. This increase is due primarily to a
reduction in manufacturing
overhead expenses.
Operating Expenses. Operating expenses decreased from $326,402 in
1994 to
$223,519 in 1995. This decrease is due primarily to elimination of
certain salaried
positions and a reduction in outside services. This downsizing was
dictated by
unprofitable operations and cash flow constraints.
Other Income (Expense). Other income (expense) decreased from a
net expense of
$14,402 in 1994 to $10,007 in 1995. This decrease is attributed
primarily to lower
interest expense on notes payable due to the reduction of principal
balances from the
conversion to common stock subscriptions and cash payments.
Results of Operations - 1994 compared to 1993
Net Sales. Net sales for the year ended December 31, 1994
increased by $32,872 as
compared to the same period in 1993 primarily as a result of
increased international
sales. International sales increased from $153,938 in 1993 to
$224,488 in 1994, of
which approximately $107,000 and $169,000 represented sales to the
Company's
dealer in Italy in 1993 and 1994 respectively.
Gross Profit. Gross profit, expressed as a percentage of sales,
decreased from 25%
in 1993 to 24% in 1994. These low profit margins are due primarily
to idle capacity
in manufacturing due to low volume of production, which results in
the allocation of
overhead expenses over a small number of manufactured products.
Operating Expenses. Operating expenses increased from $309,539 in
1993 to
$326,402 in 1994. This increase is due primarily to an increase of
approximately
$58,000 in outside services offset by a decrease of approximately
$44,000 in rent and
utility expenses.
Other Income (Expense). Other income (expense) decreased from
income of $3,418
in 1993 to an expense of 14,402 in 1994. This decrease is due
primarily to a gain on
sale of equipment to Baxter in 1993.
Liquidity and Capital Resources
At December 31, 1995 the Company had working capital of $183,176
compared to
working capital of $5,837 at December 31, 1994. This increase in
working capital is
<PAGE>
primarily attributed to proceeds received from a private placement
offering, an
increase of $40,371 in accounts receivable, a decrease of $63,415
in accounts
payable, which included the conversion of $35,546 into a note
payable and a decrease
of $76,365 in notes payable in 1995 as compared to 1994.
In 1995, net cash used in operating activities was $7,777,
resulting primarily from
increases in accounts receivables, decreases in accounts payable
and accrued
expenses, offset by a decrease in inventories.
Capital expenditures in 1995 were $9,240 and are expected to
increase in 1996 as the
Company has tooling developed for new products and product
modifications.
The ability of the Company to continue as a going concern and its
short-term
liquidity is dependent upon obtaining additional debt and/or equity
financing to fund
future development and operations. During 1995, The Company
converted $50,264
of principal and accrued interest into 670,187 shares of common
stock subscriptions.
The Company has made changes to it's current product lines and
plans to add
additional products in order to offer a more complete and
competitive line. In
addition, the Company is investigating several other new products
which are at
various stages of development. In January, 1996, the Company
completed a private
placement equity offering to raise capital. The Company has raised
$118,230 in
connection with this offering, which has and will provide working
capital to begin
development on a new product line for the Company. Additional
funding will be
required in 1996 for further development, the purchase of tooling
and the
implementation of marketing efforts.
Long-term liquidity is dependent upon the attainment of the
short-term factors
discussed above and greater sales volumes that generate profitable
operations.
Increased sales volumes in 1996 depend largely on increased
business from contract
manufacturing, increased sales from existing and new products and
royalties from
Baxter from sales to its customers. Contract manufacturing
revenues are expected
to increase slightly in 1996 as existing customers increase sales
volumes. Baxter
revenues are expected to increase as the Company begins production
on new orders.
Issued but Not Yet Adopted Standard
In October 1995, the Financial Accounting Standards Board issued
Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" which establishes new standards for stock based
employee
compensation plans. Statement No. 123 is effective for the fiscal
year ending
December 31, 1996. The Company does not intend to adopt Statement
No. 123 in
measuring expense, however it will present the proforma disclosures
and those
proforma amounts will likely be less than the amounts shown in
future statements of
operations.
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
SURGIDYNE, INC.
CONTENTS
PAGE
INDEPENDENT AUDITOR'S REPORTS
ON THE FINANCIAL STATEMENTS
8
FINANCIAL STATEMENTS
Balance sheets
9
Statements of operations
11
Statements of stockholders' equity
12
Statements of cash flows
13
Notes to financial statements
14
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
Surgidyne, Inc.
Plymouth, Minnesota
We have audited the accompanying balance sheets of Surgidyne, Inc.
as of December
31, 1995 and 1994, and the related statements of operations,
changes in stockholders'
equity, and cash flows for the years then ended. These financial
statements are the
responsibility of the Company's management. Our responsibility is
to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards.
Those standards require that we plan and perform the audit to
obtain reasonable
assurance about whether the financial statements are free of
material misstatement.
An audit includes examining, on a test basis, evidence supporting
the amounts and
disclosures in the financial statements. An audit also includes
assessing the
accounting principles used and significant estimates made by
management, as well
as evaluating the overall financial statement presentation. We
believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all
material respects, the financial position of Surgidyne, Inc. as of
December 31, 1995
and 1994, and the results of its operations and its cash flows for
the years then
ended, in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming
that the
Company will continue as a going concern. As discussed in Note 2
to the financial
statements, the Company is dependent upon obtaining additional debt
or equity
financing to fund future development and operations, which raises
substantial doubt
about its ability to continue as a going concern. Management's
plans in regard to
these matters are also described in Note 2. The financial
statements do not include
any adjustments that might result from the outcome of this
uncertainty.
McGLADREY & PULLEN,
LLP
Bloomington, Minnesota
February 16, 1996
<PAGE>
SURGIDYNE, INC.
BALANCE SHEETS
December 31, 1995
1994
ASSETS
Current Assets
Cash and cash equivalents $ 43,297
$ 11,921
Accounts receivable, less allowance for doubtful
accounts of $4,000 (Note 11) 106,236
65,865
Inventories (Note 3) 167,655
212,050
Prepaid expenses 4,428
3,652
Total current assets 321,616
293,488
Furniture and Equip, at cost (Notes 4 and 9) 360,257
351,017
Less accumulated depreciation 312,244
301,325
48,013
49,692
Other Assets
Patents, trademarks, and debt issuance costs, net of
accumulated amortization of $29,725 in 1995 and
$27,159 in 1994 12,095
14,661
Deposits 3,529
3,529
15,624
18,190
$ 385,253
$ 361,370
See Notes to Financial Statements.
<PAGE>
December 31, 1995
1994
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Notes payable to officers
and directors (Note 5) $ 19,605
$ 57,616
Notes payable (Note 5) 11,646
50,000
Current maturities of long-term debt 6,406
6,406
Accounts payable 62,509
125,924
Accrued expenses 38,274
47,705
Total current liabilities 138,440
287,651
Long-Term Debt, less current
maturities (Notes 5 and 9) 38,641
9,599
Commitments and Contingencies (Notes 9 and 10)
Stockholders' Equity (Notes 5, 6 and 7)
Series A Preferred stock, 1,600,000 shares authorized and
issued,
$400,000 liquidation preference 400,000
400,000
Common stock, no par value; authorized 18,400,000 shares;
issued
and outstanding 4,537,913 and 4,453,913 shares
in 1995 and 1994, respectively 4,286,086
4,265,086
Common stock subscriptions; 1,914,850 shares subscribed
in 1995 and 84,000 in 1994 143,614
21,000
Accumulated deficit (4,621,528)
(4,621,966)
Total stockholders' equity 208,172
64,120
$ 385,253
$ 361,370
See Notes to Financial Statements.
<PAGE>
SURGIDYNE, INC.
STATEMENTS OF OPERATIONS
Years Ended December 31, 1995
1994
OPERATIONS
Net sales (Notes 10 and 11) $ 691,471
$ 673,662
Cost of goods sold 457,070
511,400
Gross profit 234,401
162,262
Operating expenses
Research and development 11,070
29,736
Sales and marketing 52,496
59,161
General and administrative 159,953
237,505
Total operating expenses 223,519
326,402
Operating income (loss) 10,882
(164,140)
Other income (expense)
Interest income 194
462
Interest expense (Note 5) (10,201)
(14,864)
Net income (loss) $ 875
$ (178,542)
Net income (loss) per share $ -
$ (.04)
Weighted average common shares
outstanding 7,553,867
4,474,913
See Notes to Financial Statements.
<PAGE>
SURGIDYNE, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
Years Ended December 31, 1995 and 1994
Common
Preferred CommonStock Stock
Accumulated
Stock Shares Amount Subscribed
Deficit Total
Balance,
December 31, 1993 $ 400,000 4,453,913 $ 4,264,959 $ - $
(4,443,424) $ 221,535
Shares subscribed in lieu of
interest payment on
convertible debentures
(Note 5) - - -
21,000 - 21,000
Issuance of warrants
(Note 7) - - 127
- - 127
Net loss - -
- - - (178,542) (178,542)
Balance,
December 31, 1994 400,000 4,453,913 4,265,086 21,000
(4,621,966) 64,120
Subscribed shares
issued - 84,000 21,000
(21,000) - -
Shares subscribed in lieu of
notes payable and accrued
interest to directors
(Note 5) - - -
50,264 - 50,264
Shares subscribed pursuant to
private placement
(Note 2) - - -
93,350 - 93,350
Preferred stock dividends
(Note 6) - - -
- (437) (437)
Net income - - -
- 875 875
Balance,
December 31, 1995 $ 400,000 4,537,913 $ 4,286,086 $ 143,614
$(4,621,528) $ 208,172
See Notes to Financial Statements.
<PAGE>
SURGIDYNE, INC.
STATEMENTS OF CASH FLOWS
Years Ended December 31, 1995
1994
Cash Flows from Operating Activities
Net income (loss) $ 875
$ (178,542)
Adjustments to reconcile net income (loss) to net
cash used in operating activities:
Depreciation and amortization 13,485
12,911
Changes in assets and liabilities:
(Increase) decrease in:
Accounts receivable (40,371)
20,168
Inventories 44,395
35,297
Prepaid expenses (776)
3,894
Increase (decrease) in:
Accounts payable and accrued expenses (25,385)
27,757
Net cash used in operating activities (7,777)
(78,515)
Cash Flows from Investing Activities
Capital expenditures (9,240)
(13,869)
Purchase of other assets -
(248)
Net cash used in investing activities (9,240)
(14,117)
Cash Flows from Financing Activities
Proceeds from common stock subscriptions 93,350
-
Proceeds from issuance of notes payable -
50,000
Proceeds from issuance of warrants -
127
Principal payments on notes payable (38,452)
-
Principal payments on capital leases (6,505)
(6,940)
Net cash provided by financing activities 48,393
43,187
Incr. (decr.) in cash and cash equivalents 31,376
(49,445)
Cash and Cash Equivalents:
Beginning 11,921
61,366
Ending $ 43,297
$ 11,921
Supplemental Disclosures of Cash Flow Information
Cash payments for interest $ 8,917
$ 3,122
Supplemental Schedule of Noncash Financing Activities
Accrued expenses exchanged for
common shares subscribed $ -
$ 21,000
Issuance of common shares subscribed 21,000
-
Notes payable and accrued expenses exchanged for
common shares subscribed 50,264
-
Equipment purchased on capital lease -
16,772
Notes payable issued in exchange
for accounts payable 35,645
-
See Notes to Financial Statements.
<PAGE>
Note 1. Nature of Business and Significant Accounting
Policies
Nature of business: Surgidyne, Inc. (Company) designs, develops,
manufactures
and markets specialty medical and surgical wound drainage products.
The Company
sells its products primarily on a credit basis throughout the
United States and
Europe.
A summary of the Company's significant accounting policies follows:
Cash and cash equivalents: For purposes of reporting cash flows,
the Company
considers all cash and any Treasury bills, commercial paper and
money market funds
with an initial maturity of three months or less to be cash
equivalents.
Inventories: Inventories are stated at the lower of cost
(first-in, first-out method)
or market.
Net income (loss) per share: Net income (loss) per share is
computed by dividing
the net income (loss) by the weighted average number of common
shares outstanding
during the period. Common stock equivalents, consisting of options
and warrants
are not included in this calculation as their effect would be
antidilutive. In 1995, the
convertible preferred stock is included in this calculation.
Patents and trademarks: Patent and trademark costs have been
capitalized and are
being amortized over 17 years using the straight-line method.
Furniture and equipment: Furniture and equipment is carried at
cost. Depreciation
is provided for on the straight-line method over estimated useful
lives of three to
five years.
Research and development costs: Expenditures for research and
development
activities, whether performed by the Company or performed by
outside parties under
contract, are charged to operations as incurred.
Income taxes: Deferred taxes are provided on a liability method
whereby deferred
tax assets are recognized for deductible temporary differences and
operation loss
and tax credit carryforwards and deferred tax liabilities are
recognized for taxable
temporary differences. Temporary differences are the differences
between the
reported amounts of assets and liabilities and their tax bases.
Deferred tax assets
are reduced by a valuation allowance when, in the opinion of
management, it is more
likely than not that some portion or all or the deferred tax assets
will not be
realized. Deferred tax assets and liabilities are adjusted for the
effects of changes
in tax laws and rates on the date of enactment.
Fair value of financial instruments: The fair value of the notes
payable and
long-term debt are estimated based on interest rates for the same
or similar debt
<PAGE>
offered to the Company having the same or similar remaining
maturities and collateral
requirements. The carrying amount of these obligations
approximates fair value.
Management estimates: The preparation of financial statements in
conformity with
generally accepted accounting principles requires management to
make estimates and
assumptions that affect the reported amounts of assets and
liabilities and disclosure
of contingent assets and liabilities at the date of the financial
statements and the
reported amounts of revenues and expenses during the reporting
period. Actual
results could differ from those estimates.
Note 2. Going Concern
The ability of the Company to continue as a going concern and its
short-term
liquidity is dependent upon obtaining additional debt and/or equity
financing to fund
future development and operations. During 1995, the Company
converted $50,264
of principal and accrued interest into 670,187 shares of common
stock subscriptions.
The Company has made changes to it's current product lines and
plans to add
additional products in order to offer a more complete and
competitive line. In
addition, the Company is investigating several other new products
which are at
various stages of development. In January, 1996, the Company
completed a private
placement equity offering to raise capital. The Company has raised
$118,230 at $.075
per share in connection with this offering, which has and will
provide working
capital to begin development on a new product line for the Company.
Additional
funding will be required in 1996 for further development, the
purchase of tooling
and the implementation of marketing efforts. Long-term liquidity
is dependent upon
the attainment of the short-term factors discussed above and
greater sales volumes
that generate profitable operations. Increased sales volumes in
1996 depend largely
on increased business from contract manufacturing, increased sales
from existing and
new products and royalties from Baxter Healthcare Corporation from
sales to its
customers. Contract manufacturing revenues are expected to
increase slightly in
1996 as existing customers increase sales volumes. Baxter revenues
are expected
to increase as the Company begins production on new orders (see
Note 10).
Note 3. Inventories
Inventories consisted of the following:
1995
1994
Component parts and
subassemblies $ 110,229 $
131,800
Work-in-process 10,489
30,790
Finished goods 56,937
79,460
Less obsolescence reserve (10,000)
(30,000)
$ 167,655 $
212,050
<PAGE>
Note 4. Furniture and Equipment
Furniture and equipment consisted of the following:
1995
1994
Furniture, fixtures
and equipment $ 230,300 $
230,300
Tooling and molds 117,757
108,517
Automobiles 12,200
12,200
$ 360,257 $
351,017
Note 5. Notes Payable
Notes payable to related parties: The Company has short-term notes
payable
outstanding with a certain officer and director which bears
interest at 15%. The
balance of $19,605 is due on demand. In 1995, the Company
exchanged two notes
plus accrued interest totaling $50,264 for common stock at $.075
per share, or
670,187 subscribed shares. Related party interest expense was
approximately
$3,900 and $8,200 in 1995 and 1994, respectively.
Notes payable: The Company has a 12% short-term note payable,
secured by a
certain customer receivable. The balance of $11,646 is due in 1996
when the
Company receives payment from the customer.
Debentures: The Company sold $400,000 of debentures under a
private placement
offering dated in October, 1988. Interest was payable on the
unpaid balance
semi-annually on June 1 and December 1.
In 1994, the Company offered the debenture holders the option to
receive shares of
common stock at $.25 per share in lieu of the December 1, 1993
interest payment.
Accordingly, 84,000 shares of common stock were subscribed in lieu
of $21,000 of
interest payments. In 1995, 84,000 shares of common stock were
issued.
Long-term debt: In 1995, the Company converted an accounts payable
balance of
$35,546 into a non-interest barring note payable due in a single
installment on
January 1, 1997.
Note 6. Series A Preferred Stock
On December 1, 1993, the debenture holders elected to convert the
face value of the
debentures into 1,600,000 shares of unregistered Series A preferred
stock at $.25
per share. The preferred shareholders are entitled to a dividend
equal to 3% of net
sales. The dividend in a given year is limited to 50% of the
Company's net income.
<PAGE>
Cumulative dividends cannot exceed $210,000. In 1995, the Company
accrued $437
for dividends on net income.
The preferred stock is convertible into common stock on a one for
one basis, subject
to certain anti-dilutive adjustments. The preferred stock is
automatically
convertible into common stock upon the occurrence of any of the
following:
* The Company's common stock price is traded at a bid price of
$.50 or more for
thirty consecutive trading days;
* The preferred shareholders have received the cumulative
dividends specified
above.
* Two-thirds of the preferred shareholders elect to convert their
preferred stock.
Note 7. Stock Options and Warrants
Issued but not yet adopted: In October 1995, the Financial
Accounting Standards
Board issued Statement of Financial Accounting Standards No. 123,
"Accounting for
Stock-Based Compensation" which establishes new standards for stock
based
employee compensation plans. The Statement establishes a fair
value based method
of accounting for stock-based compensation plans and encourages,
but does not
require, entities to adopt that method in place of APB Opinion No.
25, "Accounting
for Stock Issued to Employees", for all arrangements under which
employees receive
shares of stock or other equity instruments of the employer or the
employer incurs
liabilities to employees in amounts based on the price of its
stock. Entities that elect
to continue under Opinion No. 25 must disclose pro forma net income
and earnings
per share for all years presented as if Statement No. 123 had been
adopted.
Statement No. 123 is effective for the fiscal year ending December
31, 1996. The
Company does not intend to adopt Statement No. 123 in measuring
expense, however
it will present the proforma income and earnings per share amounts
and such
amounts will likely be less than the amounts shown in future
statements of
operations.
Incentive stock options: The Company maintains a 1986 Incentive
Stock Option Plan.
The plan provides for issuance of up to 195,000 shares of common
stock to selected
management and other key employees of the Company.
Under the Plan, the exercise price cannot be less than 100% of the
fair market value
of the common stock on the date the option is granted. Options are
fully vested upon
issuance and are exercisable over a five year period from date of
grant. Information
with respect to incentive stock options granted as of December 31,
1995 is
summarized as follows:
<PAGE>
Aggregate
Option Price
Exercise
Shares Per Share
Price
Outstanding at
December 31, 1993 100,000 $.1875/.25
$ 21,875
Granted - -
-
Cancelled (10,000) $.1875
(1,875)
Outstanding at
December 31, 1994 90,000 $.1875/.25
$ 20,000
Granted - -
-
Cancelled - -
-
Outstanding at
December 31, 1995 90,000 $.1875/.25
$ 20,000
Warrants: The Company has granted warrants for the purchase of
shares of the
Company's common stock to directors, medical advisors and certain
debt and equity
holders. The warrants are fully vested upon issuance and expire in
varying
amounts through 1999. Information with respect to warrants granted
as of December
31, 1995 is summarized as follows:
Aggregate
Option Price Exercise
Shares
Per Share Price
Outstanding at
December 31, 1993 1,115,000
$.10625/.50 $ 257,344
Granted 185,000
$.1865/.375 53,438
Cancelled (70,000)
$.50 (35,000)
Outstanding at
December 31, 1994 1,230,000
$.10625/.375 $ 275,782
Granted
- - -
Cancelled
(160,000) $.25 (40,000)
Outstanding at
December 31, 1995 1,070,000
$.10625/.375 $ 235,782
For 1995 and 1994, there was no compensation expense recorded on
the issuance of
options or warrants as they were issued at or above quoted market
prices.
<PAGE>
Note 8. Income Taxes
Deferred tax assets consisted of the following:
1995 1994
Depreciation
$ 2,000 $ 2,000
Allowance for inventory
obsolescence
1,000 5,000
Other
3,000 3,000
Net operating loss
carryforwards
665,000 661,000
Tax credit carryforwards
42,000 42,000
Gross deferred tax assets
713,000 713,000
Less valuation allowance
713,000 713,000
Net deferred tax
assets
$ - $ -
During the years ended December 31, 1995 and 1994 the Company
recorded a
valuation allowance of $713,000 on deferred tax assets to reduce
the total to an
amount that management believes will ultimately be realized. The
Company's income
tax expense differed from the statutory federal rate as follows:
1995
1994
Statutory rate applied to
income (loss) before tax $ - $
(62,000)
State income tax net of
federal tax benefit -
(9,000)
Change in valuation
allowance -
29,000
Effect of graduated tax rates -
42,000
$ - $
-
The Company has tax net operating loss and credit carryforwards at
December 31,
1995 which are available to reduce income taxes payable in future
years. These
carryforwards and credits will expire as follows:
<PAGE>
Operating Tax
Credit
Loss Carry-
Carry-
Year forwards
forwards
1998 $ 12,000 $
900
1999 324,000
22,600
2000 226,000
13,700
2001 819,000
4,600
2002 1,128,000
-
2003 995,000
-
2004 407,000
-
2005 144,000
-
2006 4,000
-
2007 -
-
2008 164,000
-
2009 187,000
-
2010 21,000
-
$ 4,431,000 $
41,800
Note 9. Leases
Operating leases: The Company leases its office and warehouse
facilities under a
noncancellable operating lease. The lease requires monthly
payments of $3,281
through November, 1998. Rent expense was approximately $42,000 in
1995 and 1994,
respectively.
Capital leases: The Company leases equipment under capital leases
discounted at
rates of 13.9% to 16.3%, due in monthly installments of $300 to
$340 to February,
1998.
Approximate future minimum lease payments under capital leases and
the aggregate
present value of the net leases payments are as follows:
Years Ending:
1996 $
6,200
1997
4,100
1998
3,400
Total minimum payments 13,700
Less amounts representing interest 4,199
9,501
Less current maturities 6,406
$
3,095
<PAGE>
The following is a summary of equipment under capital leases at
December 31, 1995:
1995
Cost
$ 16,615
Less accumulated depreciation
8,697
$ 7,918
Note 10. Baxter Contract
In 1990, the Company entered into agreements with Baxter for the
development,
license, manufacture and sale of an autotransfusion system. The
manufacturing
agreement provided that Baxter pay an agreed upon price for the
product. This
agreement expired December 31, 1993, and the Company is currently
manufacturing
product on a bid/order basis.
The development and license agreement calls for a 20% royalty on
the net sales by
Baxter to their customers of autotransfusion products until total
royalties paid equal
$2,000,000. As of December 31, 1995 cumulative royalties paid
amounted to
approximately $160,000.
In addition, the Company has committed to pay a portion of the
manufacturing
revenues and royalties received to certain common and preferred
shareholders. A
summary of royalty activity under this contract was as follows
(approximate
amounts):
1995
1994
Manufacturing revenues
and royalty income $ 110,000
$ 51,000
Royalty expense $ 4,000
$ 2,500
<PAGE>
Note 11. Major Customers and Export Sales
Major customers: Net sales for the year ended December 31, 1995
and 1994 include
sales to major customers as follows:
Sales
Percentage
Company 1995
1994
A* 18%
25%
B 15%
8%
Year End Receivable Balances
Company
1995 1994
A*
$ 17,652 $ -
B
18,876 16,576
* International customer, representing 70% and 75% of export
sales in 1995 and
1994, respectively.
Export sales: Net export sales to international customers were
$175,612 and $224,488
in 1995 and 1994, respectively.
<PAGE>
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
NONE
<PAGE>
PART III
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Directors
The following seven persons serve as directors of the Company:
Name Age Position Director
Term*
Since
Charles B. McNeil 66 Director, Executive
Vice President and
Treasurer 1982
Theodore A. Johnson 55 Chief Executive Officer
and Chairman 1985
David B. Kaysen 46 Director 1988
William F. Gearhart 48 Director and Secretary 1984
Arthur W. Schwalm 63 Director 1984
Vance D. Fiegel 42 President and Director 1995
David Knighton, M.D. 47 Director 1994
* These directors will serve until the next annual meeting of
the shareholders.
Charles B. McNeil, founder of the Company, has over 30 years
experience in the
health care industry. He has served as Executive Vice President of
the Company for
the past six years and served as President of the Company from its
incorporation in
1982 until 1988. He served as Vice President and General Manager
of the Inmed and
Bittner Medical and Home Health Division of Inmed Corporation,
Norcross, Georgia.
Prior to joining Inmed, he was employed for 18 years by Davol,
Inc., Providence,
Rhode Island, where he directed product development for seven
years. New
products he successfully developed at Davol include numerous
disposable surgical
devices such as the Reliavac Closed Wound Suction Device, surgical
drains and
disposable surgical suction devices.
Theodore A. Johnson, Chairman of the Board and Chief Executive
Officer since
January, 1995 of Surgidyne, Inc., is also President, CEO and
Director of the
Minnesota Cooperation Office for Small Business and Job Creation,
Inc. (MCO), a
non-profit corporation formed in 1979 to foster job creation
through assisting the
start-up and growth of innovative, technological ventures in
Minnesota. Prior to
joining MCO, Mr. Johnson spent eight years at Control Data
Corporation and twelve
years at DATA 100 Corporation in a number of different technical,
marketing and
management positions. He currently serves as Chairman of the Board
of
International Lottery and Totalizator Systems, Inc., a NASDAQ
listed company in
California. In addition, he serves on the
boards of directors
<PAGE>
of three private companies and two venture capital funds and is
also an active
investor and advisor to a number of emerging companies around the
United States.
Vance D. Fiegel, President and Director of Surgidyne, Inc. since
January 1995, is
also Chief Operating Officer and the Director of Research at Embro
Corporation, a
biomedical research and development company specializing in wound
healing products
and vascular devices. At Embro, he directs corporate operations
and new product
development. He is a founder of Embro as well as the National
Reparative Medicine
Foundation where he serves as Director and Executive Vice
President. Prior to
founding Embro, Mr. Fiegel held various positions at the University
of Minnesota,
ultimately directing research in the field of wound healing where
he has published
over fifty papers in national and international journals.
David B. Kaysen, Director, is an experienced healthcare executive
with over 20
years involvement in medical products sales and marketing. He is
currently
President, CEO of Rehabilicare, Inc.. From 1991 to 1992 he served
as Vice President of Emoritis Corporation. From 1989 to 1991 he
served as Vice President of Salos/Marketing for HDM Corporation.
From 1988 to 1989, he served as
the President and
CEO and Director of Surgidyne, Inc. From 1986 to 1988, Mr. Kaysen
was Vice
President of Marketing for Red Line/XVIIIB Medi Mart, Minneapolis,
Minnesota.
William F. Gearhart, Director and Secretary, is Vice President
Sales and Marketing
for Schneider (USA), Inc. He was previously Director of Marketing
for St. Jude
Medical, and Director of Sales and Marketing for the clinical
division of Sandoz
Nutrition Corporation. Mr. Gearhart was President and COO of
MedVentures, Inc.
from 1987 to 1990, and from 1985 to 1987 was Chairman and President
of Competitive
Business Strategies, a developer of strategic planning software,
and Vice President
of Alpha Business Group, Inc., a business consulting service to
start-up medical
companies.
Arthur W. Schwalm, Director, was founder of Cardiac Pacemakers,
Inc. (CPI) in
1972 and served as President and Chief Executive Officer for 10
years. CPI was sold
to Eli Lilly in 1978. Mr. Schwalm served as Chairman of the Board
until 1983. Mr.
Schwalm also serves on the board of directors of Orthofix, Inc.
(Dallas, Texas) and
serves as its chairman. He also serves on the board of directors
of Orthofix
International N.V. (Cueracao, Netherlands Antiller). He is an
active investor
in a number of new ventures, primarily in the medical device area.
David R. Knighton, M.D., Director and Chairman of the Company's
Medical/Scientific Advisory Board. He is currently a practicing
vascular surgeon
in the Twin Cities, Medical Director of the Institute for
Reparative Medicine, and
President and CEO of Embro, Inc. Dr. Knighton founded Curative
Technologies,
Inc., an international wound healing company which specializes in
formation and
management of Wound Care Centers. In addition to his recognized
expertise in
clinical wound care, Dr. Knighton is an experienced basic science
researcher in the
field of wound repair and wound healing angiogenesis.
<PAGE>
ITEM 10. EXECUTIVE COMPENSATION
The following table sets forth the cash compensation paid or
accrued by the Company
for services rendered during the years indicated to its executive
officer serving in
the capacity as the CEO.
Long-Term Compensation
Annual Compensation
Awards Payouts
Other
Securities All
Annual
RestrictedUnderlying Other
Name and Principal Compen-Stock
Options/ LTIP Compen-
Position Year Salary Bonus sation Award(s)
SARs (#) Payouts sation
*Charles B. McNeil
(Exec. Vice Pres.) 1995$35,500 $ - $ - $ -
- $ - $ -
1994 66,000 - -
- - - -
1993 66,000 - -
- 20,000 - -
* Vance D. Fiegel is employed by the Company part-time and although
Theodore A.
Johnson, who is a non-employee of the Company, has the title of
CEO, Charles B.
McNeil has served in that capacity. Mr. Johnson does not receive
compensation from
the Company.
The following table provides information with respect to option/SAR
grants for the
year ended December 31, 1995:
Name Number of Secu- % of Total Options/
rities Underly- SARs Granted to Em-
ing Options/ ployees in Fiscal
Exercise or Base Expira-
SARs Granted (#) Year
Price ($/Sh) tion Date
Charles B. McNeil - -
$ - -
The following table provides information with respect to stock
option exercises in
fiscal 1995 by the named executive officers and the value of such
officers'
unexercised options at December 31, 1995.
Aggregate Option Exercises in Last Fiscal Year and Year-End Option
Values
Shares Number of Value of Unexercised
Acquired Unexercised Options In-the-Money Options
on Value at Year-End at Year-End
Name Exercise Realized Exercisable Unexercisable
Exercisable Unexercisable
Charles B.
McNeil - $ - 60,000 -
$ - $ -
Compensation of Directors
The Company does not provide cash remuneration to its directors.
<PAGE>
ITEM 11.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following tables presents certain information with respect to
each shareholder
known by the Company to own beneficially 5% or more of its
outstanding common
shares and for each Director and Officer as of February 23, 1996.
Each shareholder
has sole voting and investment power with respect to the shares
shown as
beneficially owned, except as otherwise indicated in a footnote.
Amount and Nature of
Name and Address of Beneficial Owner Beneficial Owner
Percent of Class
All Directors and Officers as a group
(7 people in group) 2,421,353 1
38.9%
Rose W. Totino and Leonard M. Addington, Joint Tenants
6172 Heather Circle
Fridley, MN 55432 1,126,016 2
16.4%
Theodore A. Johnson 968,208 3
14.0%
Charles B. McNeil
9909 South Shore Drive
Minneapolis, MN 55441 661,852 4
10.3%
Arnold Leonard and Mary Leonard, Joint Tenants
5212 Colonial Drive
Minneapolis, MN 55416 466,356 5
7.4%
Arthur W. Schwalm 455,293 6
6.9%
David Kaysen 130,000 7
2.1%
David R. Knighton, M.D. 106,000 8
1.7%
William F. Gearhart 100,000 9
1.6%
Vance D. Fiegel -
-
<PAGE>
******************************
1 Includes 845,000 shares issuable pursuant to options and warrants
which are
currently exercisable, 80,000 of Series A convertible preferred
stock and 870,173
shares of subscribed stock.
2 Includes 400,000 shares issuable pursuant to convertible
debentures and 333,333
shares of subscribed stock.
3 Includes 170,000 shares issuable pursuant to warrants which are
currently
exercisable, 60,000 of Series A convertible preferred stock and
534,880 shares of
subscribed stock. Does not include 27,300 shares held by Minnesota
Cooperation
Office, of which Mr. Johnson is President.
4 Includes 260,000 shares issuable pursuant to options and warrants
which are
currently exercisable.
5 Includes 75,000 shares issuable pursuant to warrants which are
currently
exercisable and 133,333 shares of subscribed stock.
6 Includes 100,000 shares issuable pursuant to warrants which are
currently
exercisable and 335,293 shares of subscribed stock.
7 Represents 130,000 shares issuable pursuant warrants which are
currently
exercisable.
8 Includes 85,000 shares issuable pursuant to warrants which are
currently
exercisable, 20,000 of Series A convertible preferred stock.
9 Represents 100,000 shares issuable pursuant warrants which are
currently
exercisable.
<PAGE>
The following tables presents certain information with respect to
each shareholder
known by the Company to own beneficially 5% or more of its
outstanding Series A
Preferred Stock shares and for each Director and Officer as of
February 23, 1996.
Each shareholder has sole voting and investment power with respect
to the shares
shown as beneficially owned, except as otherwise indicated in a
footnote.
Amount and
Nature of
Name and Address of Beneficial Owner Beneficial
Owner Percent of Class
Rose W. Totino and Leonard M.
Addington, Joint Tenants
400,000 25.0%
Samuel M. Joy
828 Ridge Place
Mendota Heights, Mn 55118
140,000 8.8%
Dr. Demetre Nicoloff
c/o National City Bank
Account #50-1580-04
75 South Fifth Street
Minneapolis, Mn 55402
120,000 7.5%
Eugene T. and Joan L. Plitt
S76 West 12816 Cambridge Court
Muskego, WI 53150
100,000 6.3%
John M. Metcalfe
6565 Word Parkway
Melbourne Village, FL 32904-3636
80,000 5.0%
Dr. Melvin P. Bubrick
5712 Long Brake Trail
Edina, MN 55345
80,000 1 5.0%
Theodore A. Johnson
60,000 3.8%
David R. Knighton, M.D.
20,000 1.3%
All Directors and Officers as a group
80,000 5.0%
******************************
1 Includes 40,000 shares held in trust in the names of Dr.
Bubrick's children.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In 1991, Theodore A. Johnson, Arthur W. Schwalm and Charles B.
McNeil each
loaned the Company $25,000 in the form of short-term notes payable
bearing interest
at 15%. The aggregate balance of these notes as of December 31,
1995 was $19,605.
In 1995, the Company exchanged two notes plus accrued interest
totaling $50,264 for
common stock at $.075 per share.
<PAGE>
PART IV
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits required to be filed by Item 601(a) of Regulation
S-B are included as
Exhibits to this report as follows:
3.1 Articles of Incorporation of Surgidyne, Inc. (including
Articles of Merger).1
3.2 Bylaws of Surgidyne, Inc.1
4.1 Private Placement Offering Statement of Terms for
Convertible Subordinated
Debenture Offering.2
4.2 Form of 12% Convertible Subordinated Debenture for
Convertible Subordinated
Debenture Offering.2
4.3 Form of 10% Convertible Subordinated Debenture for
Convertible Subordinated
Debenture Offering.2
4.4 Form of Convertible Subordinated Debenture Agreement for
Convertible
Subordinated Debenture Offering.2
4.5 Form of Amendment to Convertible Subordinated Debenture
Agreement for
Convertible Subordinated Debenture Offering, dated November 28,
1989.3
4.6 Common Stock Purchase Warrant dated December 22, 1988,
issued to Samuel
M. Joy for the purchase of 21,600 shares at a price of $0.01 per
share.2
4.7 Common Stock Purchase Warrant dated February 28, 1989,
issued to Samuel
M. Joy for the purchase of 5,400 shares at a price of $0.01 per
share.2
4.8 Form of Amendment to Convertible Subordinated Debenture
Agreement for
Convertible Subordinated Debenture Offering, dated June 5, 1990.4
4.9 1990 Private Placement Offering Memorandum.4
10.1 Lease dated August 23, 1985 between Technology Park
Associates and
Surgidyne, Inc. for the office and warehouse space located at 9600
West 76th Street,
Eden Prairie, Minnesota, as amended.1
10.2 Lease dated January 30, 1989 between Medical Incorporated
and Surgidyne,
Inc. for the office and warehouse space located at 9605 West
Jefferson Trail, Inver
Grove Heights, Minnesota.2
10.3 1984 Stock Option Plan.1
10.4 1986 Stock Option Plan.1
10.5 Selling Agency Agreement dated October 12, 1988 between
Surgidyne, Inc.
and Samuel M. Joy.2
10.6 Employment Agreement dated September 11, 1989 between
Surgidyne, Inc. and
Thomas J. McEvoy.3
10.7 Lease dated August 1, 1990 between Omnicor, Inc. and
Surgidyne, Inc. for
the office and warehouse space located at 9605 West Jefferson
Trail, Inver Grove
Heights, Minnesota.4
10.8 Development and license agreement and Manufacturing
Agreement dated
October 9, 1990 with Baxter Healthcare Corporation.4
10.9 Lease dated August 1, 1991 between Omnicor, Inc. and
Surgidyne, Inc. for
the office and warehouse space located at 9605 West Jefferson
Trail, Inver Grove
Heights, Minnesota.5
10.10 Lease dated June 21, 1994 between Medicine Lake Properties
of Plymouth and
<PAGE>
Surgidyne, Inc. for office and warehouse space located at 9909
South Shore Drive,
Minneapolis, Minnesota.6
10.11 Purchase and sale of Assets and Restated Manufacturing
Agreements dated
August 24, 1993 with Baxter Healthcare Corporation.7
10.12 Promissory note dated June 14, 1994 between Robert D.
Furst, Jr. and
Surgidyne, Inc.9
1 Incorporated by reference to Exhibits filed with
Registrants' 1987 Form
10-K under the Securities and Exchange Act of 1934, file
#33-13058-C.
2 Incorporated by reference to Exhibits filed with
Registrants' 1988 Form
10-K under the Securities and Exchange Act of 1934, file
#33-13058-C.
3 Incorporated by reference to Exhibits filed with
Registrants' 1989 Form
10-K under the Securities and Exchange Act of 1934, file
#33-13058-C.
4 Incorporated by reference to Exhibits filed with
Registrants' 1990 Form
10-K under the Securities and Exchange Act of 1934, file
#33-13058-C.
5 Incorporated by reference to Exhibits filed with
Registrants' 1991 Form
10-K under the Securities and Exchange Act of 1934, file
#33-13058-C.
6 Incorporated by reference to Exhibits file with
Registrant's Form 10-QSB
for the quarter ended June 25, 1994 under the Securities and
Exchange Act of 1934,
file #33-13058-C.
7 Incorporated by reference to Exhibits file with
Registrant's Form 10-QSB
for the quarter ended September 24, 1994 under the Securities and
Exchange Act of
1934, file #33-13058-C.
8 Incorporated by reference to Exhibits file with
Registrant's 1993 Form
10-KSB under the Securities and Exchange Act of 1934, file
#33-13058-C.
9 Incorporated by reference to Exhibits file with
Registrant's Form 10-QSB
for the quarter ended June 30, 1994 under the Securities and
Exchange Act of 1934,
file #33-13058-C.
B. Reports on Form 8-K.
No reports on Form 8-K were filed during the last quarter
of the fiscal year
covered by this report.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
SURGIDYNE, INC.
(Registrant)
/s/
March , 1996
By: Vance D. Fiegel
President and Principal Accounting Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated.
/s/
March , 1996
By: Charles B. McNeil
Executive Vice President, Treasurer and Director.
/s/
March , 1996
By: Theodore A. Johnson
Chief Executive Officer and Chairman of the Board of Directors
/s/
March , 1996
By: David B. Kaysen
Director
/s/
March , 1996
By: Arthur W. Schwalm
Director
/s/
March , 1996
By: William F. Gearhart
Secretary and Director
/s/
March , 1996
By: David R. Knighton
Director
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
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<COMMON> 4,286,086
0
400,000
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<TOTAL-REVENUES> 691,471
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<EPS-PRIMARY> .00
<EPS-DILUTED> .00
</TABLE>
